A draft report suggested CSS be split into two, one comprising those vital to national development or are legislatively backed, and the other those for social protection and social inclusion

Among the major Centrally Sponsored Schemes, some are the National Health Mission, Pradhan Mantri Gram Sadak Yojana and Rashtriya Krishi Vikas Yojana.

If the recommendations of the subgroup of chief ministers under the NITI Aayog headed by Madhya Pradesh chief minister Shivraj Singh Chouhan are accepted, states will have the flexibility to use 25% of the allocations for centrally sponsored schemes(CSS) according to their priorities, compared with 10% at present.

The panel is understood to have submitted its final report to the NITI Aayog on Thursday. Currently, state governments can use 10% of the allocations in a manner they feel is best suited for a particular scheme and have been asking for more freedom to spend the funds such that they better address local needs. Among the major ones are the National Health Mission, Pradhan Mantri Gram Sadak Yojana and Rashtriya Krishi Vikas Yojana.

Centrally sponsored schemes relate to state and local governance subjects or those on the concurrent list that are to be implemented by states. After a recent meeting of the subgroup, Chouhan had told the media that a broad consensus had been arrived at on having two types of schemes and on reducing the number of schemes to 30 from the current 72. Of these, six were added by the NDA government.

A draft report suggested CSS schemes be divided into two broad groups, the first comprising schemes that are core to the national development agenda or are legislatively backed such as MNREGA, Swachh Bharat mission and the one on mid-day meals in schools.

The second category would comprise optional schemes for social protection and social inclusion.

The 14th Finance Commission had recommended that the government increase the tax devolution to states to 42% from 32%; in FY16 this is estimated at Rs 5.2 lakh crore compared with Rs 3.8 lakh crore in FY15. This will be the primary route of transfer of resources from the Centre to the states and the funds will not be earmarked for any particular use. As a result, the CSS and central assistance to state plans as a whole to reduce but be more than compensated by a bigger devolution of taxes. In Budget FY16, an amount of Rs 1.9 lakh crore has been allocated as central assistance to states compared with Rs 3.3 lakh crore in FY15.

The assistance to central and centrally sponsored schemes for FY16 is budgeted at Rs 23,869 crore, as against Rs 4586 crore in FY15.